Can't afford to repay debts whilst on Mat Leave. Any suggestions?

prosaver

cant you get tax credits for that period?
might be able to get a council tax rebate
http://www.entitledto.co.uk/benefits-calculator/startcalc.aspx

cms-help

Kaloloke wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 4 (how old are the children?
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1250
Partners monthly income after tax....... 600
Benefits................................ 348 (this will likely increase based on your maternity pay)
Other income............................ 0
Total monthly income.................... 2198

Monthly Expense Details
Mortgage................................ 322
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 109 (is this over 10 or 12 months?)
Electricity............................. 60 (seems high)
Gas..................................... 60 (seems high)
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 45 (this is expensive these days)
Mobile phone............................ 45 (how many phones? If it's just one, it's expensive)
TV Licence.............................. 0 (you don't watch TV at all?)
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 450 (you can save £50 here)
Clothing................................ 50
Petrol/diesel........................... 160 (this will decrease with just one of you at work surely)
Road tax................................ 70 (£70 a month? WOW!)
Car Insurance........................... 75 (is this for both vehicles?)
Car maintenance (including MOT)......... 50
Car parking............................. 20 (will this stop when you stop work?)
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 150 (what is this for and will you need it whilst on maternity leave?)
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 0
Life assurance ......................... 20
Other insurance......................... 41 (this is expensive, what is it?)
Presents (birthday, christmas etc)...... 40
Haircuts................................ 20
Entertainment........................... 0
Holiday................................. 50 (do you need this? Is it already booked?)
Emergency fund.......................... 0 (you should have something here as a homeowner with 4 children)
Xmas.................................... 20
Annual tickets.......................... 25 (?)
Labour.................................. 6
Union................................... 6
Total monthly expenses.................. 1954


Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 6300
Other assets............................ 0
Total Assets............................ 146300


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 60000....(322)......3.29
Total secured & HP debts...... 60000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................3300......25........0
Tesco..........................1600......70........0
Santander Loan.................6500......147.......8
Mum............................2000......0.........0
Total unsecured debts..........13400.....242.......-


Monthly Budget Summary
Total monthly income.................... 2,198
Expenses (including HP & secured debts). 1,954
Available for debt repayments........... 244
Monthly UNsecured debt repayments....... 242
Amount left after debt repayments....... 2

Personal Balance Sheet Summary
Total assets (things you own)........... 146,300
Total HP & Secured debt................. -60,000
Total Unsecured debt.................... -13,400
Net Assets.............................. 72,900

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.


My income is going to fall to approximately £600 per month in September 2017 and then £0 in February 2018 until May 2018. Wages will then be £1100 per month from June 2018.

This is a deficit of approximately 8250 on our income.

I think my child benifit will increase by £13 per week. So 676 for the year

We obviously won't be able to spend on anything but the absolute essentials whilst on leave.

My phone contract ends in June so I will get a much cheaper deal. I am hoping to save at least £180.

We are converting our van into a 7 seater so that we can sell our car in June 2017. We should make approximately 1500 from selling the car and save approximately 1500 per year on not having a 2nd vehicle. So hopefully a £3000 saving

I want to get a better mortgage deal in June as that is when my current deal ends. So there will hopefully be a saving of £360 per year there.

I have got email advice from stepchange who have suggested that I pay £1 a month to each debt. My concern is that if I do this I will then end up owing far more money to my debts because of defaulting and the creditors trying to get their money via debt recovery, charging me interest and for the debt recovery.

I really don't want to add the debt to my mortgage but it is an option that would probably end up costing another £15000 on top.

Would we be better off going into our £3000 overdraft and paying £60 a month OD fee so that we don't default on the loan and cards? Or should I try to get another 0% card to see us through the next year? Or both?

I could pay £25 a month to the tesco card but at £70 it is paid off before the end of the 0% deal. At £25 I would start to get interest before I can pay it off.

Any advice would really be appreciated.

Basically, you're trying to save £600 whilst on maternity leave if I am reading your posts correctly. Questions and comments in red above.

I think you're going to struggle to be honest unless you can stop the child related expenses, whatever they are, and your benefits substantially increase. If you're at home on maternity leave, can your other half pick up extra shifts to earn more money?

Otherwise, look at another 0% card(s) with long balance transfer periods so that you can reduce the amount paid each month but it's not going to be a massive saving every month and certainly not enough to cover the deficit. Using the overdraft is just another £60 a month charge that you don't have the capacity to cover so far more costly than a 0% card.

warby68

Kaloloke wrote: »

Unfortunately mine is the first income.

The MBNA is on minimum on a 0% for another 26 months. Hence I want to keep the Tesco at 70 to pay it off before it gets interest costs. Then I could pay the MBNA £95 a couple of months and then move what's left to another 0%..

I am considerind taking out another 0% card on purchases to make up the rest of the loss after savings over the next year. I think I may get more in tax credits due to the loss in income but not entirely sure as no one can tell me whether I will have moved to universal credit or not as my area is changing this year and after numerous phonecalls to both tax credits and uc I cannot get an answer. So I am basing my benefits on the tax credits we are getting now.

I know you're sharply focussed on getting your 12m at home but no matter how you wiggle and jiggle to get through that 12m, you are extremely vulnerable to even a small bump in the road. You have no emergency fund and eventually your ability to obtain cheap credit will slow down as you use more/earn less/pay less. Likewise new mortgage deals based on affordability.

I know you're asking what's the best borrowing method but really a solution which involves no more borrowing is better, even if its not your ideal. There are plenty of families who earn more and have fewer children and still can't afford a full 12m of maternity leave, as much as its lovely to have. I know I couldn't have. I think it was 9m max when I had mine and we felt stretched at that and I only had 2. I fully understand why you want it but try and stay a little flexible as you also have your longer term family 'survival' to consider.

Kaloloke

I should be able to get a new lower mortgage as my LTV is only 48%. I am considering also adding it to my mortgage. Which in the long run is going to be most costly but won't be in the short term. The other option is going back to work and see if they will either accommodate me or put me on gardening leave. It may be the cheapest option. If I putbit on the mortgage I worked out that my mortgage would be 373 per month over 22 years and no more debt repayments and having the full 12 months. I know that adding to the mortgage is usually a really bad idea because of the long term effect but it would give me a bit of wriggle room each month. Which may be more sensible than being unable to pay the debts and ruining my credit rating for a decade.

January2015

Your posts come across (to me anyway) that you are determined to take the maternity leave come what may and are ready to increase your debt, either secured or unsecured, in order to achieve your goal regardless of what advice you get in response to your question.

In general all the advice you will get on here would be to not increase your debt and to be flexible regarding return to work dates.

I would love to have been able to take a year off with each of my children. I took 8 weeks at the most. We had a mortgage and we needed my income. We were lucky we had family to care for the children - it was a balancing act though. We very much wanted our family when we had it, but we both had to work to afford it.

warby68

It certainly seems a more manageable plan if you don't envisage your income growing significantly in the fairly short term.

Remortgaging goes against the grain round here for good reasons but I think if you have a young family then managing that phase over a longer period might be sensible especially if you want to keep a 'clean' credit history. Of course you risk your equity and paying more eventually but your need for surplus income now and leeway in your budget for house/vehicle maintenance plus the increasing costs of 5 children is pretty much trumping everything.

I worry though whether you will meet affordability criteria regardless of low LTV.

Clearly, you're going to have 12m come what may but I don't think its unsupportive, rather totally realistic, to keep pointing out its a luxury you really can't afford.

Livelongandprosper

Extending your mortgage is going to cost a fortune. Also remember, all forecasters are saying interest rates have to rise. Just 1% raise could break you completely. Usually once rates rise once, it's easier for the BOE to increase them further and faster

You need to sort out your spending now. You are barely scraping by now and it's obvious that any extra unexpected spends are going on credit. This isn't sustainable

As for remortgaging, don't hold your breath, you will no doubt be refused on affordability

As already said, you can't afford the year maternity unless your partner ups their income. There is a lot to be shaved off your groceries , you could get that to £300 a month or less easily

But unless that's a road you want to travel, and from your post it's not, there's not a lot more to say

enthusiasticsaver

I don't think any of the options would be advisable for your long term financial security and would suggest you go back to work at the 9 month point when most babies have finished or almost finished breastfeeding anyway. Defaulting or going on a DMP will affect your credit record. A £60 monthly fee on top of an overdraft will dig you in to a hole you may find difficult to get out of. Adding to your mortgage puts your home at risk and makes the debt overall more expensive and on your income you will struggle to get further borrowing at 0%.

Alternatively you could cut back hard on expenditure or your partner could get a second job or increase his income somehow. I think you need to look at the bigger picture here. Is it really worth jeopardising your family's financial security for an extra 3 months maternity leave?

EssexHebridean

I think there is a bigger picture here that is possibly being missed, too. Your current surplus is showing at £2 a month - even allowing for another bit of child benefit appearing on there, is that really going to cover the cost of feeding, clothing and generally looking after another child? Actually, it's worse than that isn't it - based on your first post your income will be taking a drop when you do go back to work as well - so in fact that SOA as it stands already shows a deficit. I think your OH needs to look at increasing income very dramatically - otherwise even while you're NOT on Mat Leave, the books are simply not going to balance.

Put bluntly (and this is a general thing not solely directed at the OP) it is a shame that more people don't realise/understand that sums need to be done before the lifestyle choice of increasing family size is made. Sadly a lot of people put more thought into whether they can afford to keep a dog or cat, than a child.

spadoosh

Partner should take paternity.

Your wage would be halved, your partners income would only reduce a bit. Not sure how much that would effect benefits though.